agl-20221231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________________

FORM 10-K/A

Amendment No. 1

(Mark One)


x			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2022


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-40332

____________________________________________________________________

agilon health, inc.

(Exact name of registrant as specified in its charter)


Delaware			37-1915147
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

6210 E Hwy 290, Suite 450 Austin, Texas			78723
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code (562) 256-3800

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	AGL	The New York Stock Exchange

____________________________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant; (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). o

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act.) Yes o No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $4.5 billion.

As of February 24, 2023, there were 413,118,724 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the registrant’s 2023 Annual Meeting of Stockholders have been incorporated by reference into Part III of this Report.


Part II		2
Item 8.	Financial Statements and Supplementary Data	3

Part IV		41
Item 15.	Exhibits and Financial Statement Schedules	41
	Signatures	42


Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)			F-1
Consolidated Balance Sheets as of December 31, 2022 and 2021			F-4
Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021 and 2020			F-5
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021 and 2020			F-6
Consolidated Statements of Contingently Redeemable Common Stock and Stockholders’ Equity (Deficit) for the Years Ended December 31, 2022, 2021 and 2020			F-7
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020			F-8
Notes to Consolidated Financial Statements			F-9
Schedule I—Registrant’s Financial Statements			F-37


			Estimating Medicare Advantage risk adjustment revenue

Description of the Matter			As described in Note 2 to the consolidated financial statements, for the year ended December 31, 2022, the Company had $2,704 million in medical services revenue. Medical services revenue primarily consists of capitation fees under contracts with various Medicare Advantage payors. Under the typical capitation arrangement, the Company is entitled to monthly per-member, per-month (“PMPM”) fees to provide a defined range of healthcare services for Medicare Advantage health plan members attributed to the Company’s contracted primary care physicians. The transaction price for the Company’s capitation contracts is variable, as the PMPM fees to which the Company is entitled are subject to periodic adjustment under the Center for Medicare & Medicaid Services (“CMS”) risk adjustment payment methodology and it may take a significant amount of time for such PMPM fees, including the periodic adjustments, to finally get settled. Risk adjustment-related revenues are estimated using the most likely amount methodology and amounts are only included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once any uncertainty is resolved. Auditing the Company’s estimation of variable consideration under the CMS risk adjustment methodology, specifically the CMS risk adjustment accrual, was especially challenging because the calculation involves subjective management assumptions about current members’ health status to determine the risk adjustment payment estimated to be received in the future.

How We Addressed the Matter in Our Audit			To test the estimation of variable consideration under the CMS risk adjustment methodology, our audit procedures included, among others, understanding and evaluating the subjective management assumptions used in management’s CMS risk adjustment accrual calculation. We evaluated the current members’ health status utilizing historical experience of the Company and by comparing a sample of members’ health status assumptions to underlying medical diagnosis data, and other relevant factors. We further reviewed the medical risk adjustment PMPMs on a market by market basis to evaluate consistency in management’s accruals. Additionally, we performed a review of prior period estimates using subsequent health plan data and evaluated management’s related disclosures.


			Valuation of incurred but not reported claims

Description of the Matter			As of December 31, 2022, the Company’s medical claims and related payables totaled $347 million, substantially all of which related to the Company’s estimate for claims that have been incurred but have either not yet been received, processed, or paid and as such, not reported (“IBNR”). As discussed in Note 2 to the consolidated financial statements, management develops its IBNR liability estimate using actuarial methods commonly used by health insurance actuaries that include a number of factors and assumptions, including medical service utilization trends, changes in membership, observed medical cost trends, historical claims payment patterns and other factors. Auditing management’s estimate of the IBNR liability was complex and required the involvement of actuarial specialists due to the highly judgmental nature of the factors and assumptions used in the measurement process. These assumptions have a significant effect on the valuation of the IBNR liability.

How We Addressed the Matter in Our Audit			To test the IBNR liability, our audit procedures included, among others, testing the completeness and accuracy of data used in the Company’s models by testing reconciliations of underlying claims and membership data recorded in source systems to the actuarial reserve models, and comparing claims to source documentation, including statements and claims data received from health plans. With the assistance of our actuarial specialists, we used the Company’s underlying claims, membership data and generally accepted actuarial methodologies used within the industry to develop an independent range of IBNR estimates and compared those estimates to management’s recorded IBNR liability. Additionally, we performed a review of prior period estimates using subsequent claims development, and we evaluated management’s IBNR disclosures.


	December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	497,070	$	1,040,039
Restricted cash and equivalents	10,610		14,781
Marketable securities	411,901		—
Receivables, net	497,574		293,407
Prepaid expenses and other current assets, net	34,119		18,968
Total current assets	1,451,274		1,367,195
Property and equipment, net	20,050		9,161
Intangible assets, net	67,680		55,398
Goodwill	41,540		41,540
Other assets, net	116,924		112,958
Total assets	$	1,697,468	$	1,586,252
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Medical claims and related payables	$	346,727	$	239,014
Accounts payable and accrued expenses	183,364		112,946
Current portion of long-term debt	5,000		5,000
Total current liabilities	535,091		356,960
Long-term debt, net of current portion	38,482		43,401
Other liabilities	83,286		94,295
Total liabilities	656,859		494,656
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $0.01 par value: 2,000,000 shares authorized; 412,385 and 400,095 shares issued and outstanding, respectively	4,124		4,001
Additional paid-in capital	2,106,886		2,045,572
Accumulated deficit	(1,064,230)		(957,677)
Accumulated other comprehensive income (loss)	(5,560)		—
Total agilon health, inc. stockholders' equity (deficit)	1,041,220		1,091,896
Noncontrolling interests	(611)		(300)
Total stockholders’ equity (deficit)	1,040,609		1,091,596
Total liabilities and stockholders’ equity (deficit)	$	1,697,468	$	1,586,252


	Year Ended December 31,
	2022		2021		2020
Revenues:
Medical services revenue	$	2,704,396	$	1,829,735	$	1,214,270
Other operating revenue	3,815		3,824		4,063
Total revenues	2,708,211		1,833,559		1,218,333
Expenses:
Medical services expense	2,399,798		1,647,659		1,021,877
Other medical expenses	196,127		109,487		102,306
General and administrative (including noncash stock-based compensation expense of $28,381, $292,394, and $6,472, respectively)	218,945		455,821		137,292
Depreciation and amortization	13,772		14,544		13,531
Total expenses	2,828,642		2,227,511		1,275,006
Income (loss) from operations	(120,431)		(393,952)		(56,673)
Other income (expense):
Other income (expense), net	24,725		(4,500)		2,465
Gain (loss) on lease terminations	(5,458)		—		—
Interest expense	(4,525)		(6,146)		(8,135)
Income (loss) before income taxes	(105,689)		(404,598)		(62,343)
Income tax benefit (expense)	(1,640)		(886)		(865)
Income (loss) from continuing operations	(107,329)		(405,484)		(63,208)
Discontinued operations:
Income (loss) before gain (loss) on sales and income taxes	491		(3,463)		(20,049)
Gain (loss) on sales of assets, net	—		473		20,401
Income tax benefit (expense)	(26)		1,687		2,804
Total discontinued operations	465		(1,303)		3,156
Net income (loss)	(106,864)		(406,787)		(60,052)
Noncontrolling interests’ share in (earnings) loss	311		300		—
Net income (loss) attributable to common shares	$	(106,553)	$	(406,487)	$	(60,052)
Net income (loss) per common share, basic and diluted
Continuing operations	$	(0.26)	$	(1.09)	$	(0.20)
Discontinued operations	$	—	$	—	$	0.01
Weighted average shares outstanding, basic and diluted	408,154		372,931		323,462


	Contingently Redeemable Common Stock			Total Stockholders’ Equity (Deficit)
	Shares	Amount		Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (loss)		Noncontrolling Interests		Total Stockholders’ Equity (Deficit)
				Shares	Amount
January 1, 2020	69,860	$	281,000	246,743	$	2,467	$	256,643	$	(491,138)	$	—	$	—	$	(232,028)
Net income (loss)	—	—		—	—		—		(60,052)		—		—		(60,052)
Issuance of contingently redeemable common stock	6,341	28,500		—	—		(460)		—		—		—		(460)
Issuance of common stock	—	—		1,235	13		5,537		—		—		—		5,550
Repurchase of common stock	—	—		(1,500)	(15)		(6,727)		—		—		—		(6,742)
Exercises and vesting of stock-based awards	—	—		2,562	26		788		—		—		—		814
Settlement of stock-based liabilities	—	—		334	3		1,497		—		—		—		1,500
Stock-based compensation expense	—	—		—	—		6,688		—		—		—		6,688
January 1, 2021	76,201	$	309,500	249,374	$	2,494	$	263,966	$	(551,190)	$	—	$	—	$	(284,730)
Net income (loss)	—	—		—	—		—		(406,487)		—		(300)		(406,787)
Reclassification of contingently redeemable common stock in connection with IPO	(76,201)	(309,500)		76,201	762		308,738		—		—		—		309,500
Issuance of common stock in connection with IPO, net of offering costs	—	—		53,590	536		1,162,597		—		—		—		1,163,133
Issuance of common stock under partner physician group equity agreements upon IPO	—	—		11,672	117		268,350		—		—		—		268,467
Exercises and vesting of stock-based awards	—	—		9,258	92		17,994		—		—		—		18,086
Stock-based compensation expense	—	—		—	—		23,927		—		—		—		23,927
January 1, 2022	—	$	—	400,095	$	4,001	$	2,045,572	$	(957,677)	$	—	$	(300)	$	1,091,596
Net income (loss)	—	—		—	—		—		(106,553)		—		(311)		(106,864)
Other comprehensive income (loss)	—	—		—	—		—		—		(5,560)		—		(5,560)
Exercise of stock options	—	—		11,923	119		33,768		—		—		—		33,887
Vesting of restricted stock units	—	—		404	4		(4)		—		—		—		—
Shares withheld related to net share settlement	—	—		(37)	—		(831)		—		—		—		(831)
Stock-based compensation expense	—	—		—	—		28,381		—		—		—		28,381
December 31, 2022	—	$	—	412,385	$	4,124	$	2,106,886	$	(1,064,230)	$	(5,560)	$	(611)	$	1,040,609


			Years
Computer equipment and software			3 – 5
Furniture and fixtures			5 – 7


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable securities:
Corporate debt securities	$	255,613	$	60	$	(3,240)	$	252,433
U.S. Treasury notes	151,873		—		(2,306)		149,567
Other	9,975		—		(74)		9,901
	$	417,461	$	60	$	(5,620)	$	411,901


Year	Amortized Cost		Fair Value
2023	$	128,537	$	127,517
2024	141,385		139,332
2025	147,539		145,052
	$	417,461	$	411,901


NOTE 1. Business


NOTE 2. Summary of Significant Accounting Policies


NOTE 3. Concentration of Credit Risk


	December 31,
	2022		2021
Payor A	13	%	18	%
Payor B	20	%	21	%
Payor C	10	%	14	%
Payor D	10	%	12	%
Payor E	11	%	*


	December 31, 2022
	Level 1		Level 2		Level 3
Marketable securities:
Corporate debt securities	$	—	$	252,433	$	—
U.S. Treasury notes	149,567		—		—
Other	9,901		—		—
	$	159,468	$	252,433	$	—


	Year Ended December 31,
Supplemental Cash Flow Information	2022		2021		2020
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows from operating leases	$	4,960	$	4,409	$	4,495
ROU asset obtained in exchange for new lease liability:
Operating leases	$	8,200	$	5,116	$	363


	December 31,
Weighted Average Lease Term and Discount Rate	2022		2021
Weighted average remaining lease term (years):
Operating leases	6		5
Weighted average discount rate:
Operating leases	5.47	%	8.15	%


	Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Health plan contracts	15	$	39,700	$	(16,983)	$	22,717
Trade names	15-30	20,300		(4,342)		15,958
Provider networks	10-15	8,400		(3,593)		4,807
Noncompete enforcement agreements	1-5	59,669		(36,100)		23,569
Other	4-15	2,700		(2,071)		629
		$	130,769	$	(63,089)	$	67,680

SEC Form 10-K/A filed by agilon health inc. (Amendment)